The power of the auction

The traditional broker listing and selling method of real estate isn’t going away soon or ever. For the majority of buyers and sellers, it’s the only way they know.  For the most part, having someone to represent and negotiate on your behalf takes the pressure off of you.  

So you find a broker, decide an asking price, and because the market in heating up; you set the price a bit higher than you really expect to get offered and you wait. The reality is, you’re not really that motivated to sell.

But what if you didn’t have the luxury of time on your side? What if you had a court order to sell, or you had inherited a house from a distant relative? In these situations, your motivation to sell increases dramatically.

Bill Sheridan is a successful auctioneer and broker who conducts the majority of his real estate sales through the regular old broker process. He talked about the one out of ten transactions where an auction becomes the strongest sales tool.  He refers to them as one of the Five Ds that motivates these sellers.  

The Five Ds that magnify the power of the real estate auction are Death, Disease, Divorce, Distress and Default.

I know as you read this, you’re thinking, "Those are actually the things I’m trying to avoid in my life." And you’re right, we all hope those Five D’s won’t happen to us but unfortunately most of us will be for many of us one or all of them may affect us someday.

These five situations are also the key factors in creating an extremely motivated seller. Most motivated sellers are also much more realistic in terms of what the real estate is really worth. Overpricing isn’t an option. Plus the terms of sales are clearly spelled out before the auction starts. In most cases; the real estate must be sold and must be done so within a specific time frame, along with a specific closing date.

 The wait and see approach is not an option. So instead of setting the price high and working it down to a negotiated sale, it’s the opposite. The auction is always working the price up. Plus buyers come ready to buy, and ready to be the winning bidder.